Microsoft faces UK competition investigation over hiring of AI startup’s founder and key staff

LONDON — British regulators opened a preliminary investigation Tuesday into Microsoft’s hiring of key staff from an AI startup over fears it could thwart competition in the booming artificial intelligence market.

The Competition and Markets Authority said that its hiring review of Inflection AI, including its co-founder and CEO Mustafa Suleyman, found “sufficient information” to open an investigation.

microsoft hired Suleyman to head its consumer AI business earlier this year and hired several top engineers and researchers. Suleyman co-founded AI research lab DeepMind, which is now owned by Google, before creating Inflection and is considered an influential figure in the world of AI.

The watchdog has indicated it was assessing whether the hires amount to a merger resulting in “a substantial lessening of competition” in the UK AI market, in breach of the country’s antitrust rules.

“We are confident that recruiting talent promotes competition and should not be treated as a merger,” Microsoft said in a statement. “We will provide the UK Competition and Markets Authority with the information it needs to complete its investigations quickly.”

The British watchdog has until September 11 to decide whether to give its approval or escalate the investigation to an in-depth investigation. The authority has the power to reverse agreements or impose solutions to address competition problems.

Policymakers on both sides of the Atlantic are concerned about how the biggest technology companies are gobbling up the talent and products of innovative AI startups without formally acquiring them.

Three members of the US Senate wrote last week to antitrust agents at the Justice Department and the Federal Trade Commission, urging them to investigate Amazon’s deal with San Francisco-based Adept. The deal will result in Adept’s CEO and key employees going to Amazon and giving the e-commerce giant a license to Adept’s AI systems and data sets.